JANET RENO,
in her official capacity of Attorney General of the United
States;

UNITED STATES DEPARTMENT OF JUSTICE;

LOUIS J. FREEH,
in his official capacity of Director of the Federal Bureau
of Investigation;

and

FEDERAL BUREAU OF INVESTIGATION;
Defendants.

COMPLAINT FOR DECLARATORY AND INJUNCTIVE
RELIEF

I. INTRODUCTION

This is an action for declaratory and injunctive
relief, challenging a regulation promulgated by the
Federal Bureau of Investigation ("FBI") under the
Communications Assistance for Law Enforcement Act
("CALEA"), 47 U.S.C. §§ 1001 et seq. (1994).
CALEA was intended to preserve law enforcement's
electronic surveillance capabilities by requiring
carriers to ensure that their systems can continue to
conduct surveillance despite the development of advanced
communications technologies.

CALEA states that a telecommunications carrier's
equipment, facilities or services "installed or deployed"
on or before January 1, 1995, shall be considered to be
in compliance with the assistance capability requirements
of CALEA until the Attorney General agrees to pay all
reasonable costs associated with modifications necessary
to retrofit such equipment, facilities or services. On
March 20, 1997, the FBI promulgated regulations that,
among other things, defined "installed or deployed" as
follows:

Installed or deployed means that, on a specific
switching system, equipment, facilities, or services
are operable and available for use by the carrier's
customers. 28 C.F.R. § 100.10.

By defining the two separate words "installed" or
"deployed" to have the same meaning, the FBI has
attempted to shift the cost of CALEA compliance to
certain carriers directly contrary to the stated intent
of Congress in passing CALEA. The FBI's regulatory
definition fails to acknowledge that Congress intended
that carriers be reimbursed to retrofit all existing
equipment, services and features at the time CALEA was
enacted.

Failure to give the statutory language meaning leads
to anomalous results, as the FBI itself has admitted in
numerous public fora. For example, under the FBI's
definition of "installed or deployed", if a carrier
installed a certain switch in its network just one day
after January 1, 1995, that switch would have to be fully
CALEA-compliant at the carrier's own expense even though
the same carrier installing the same switch type just two
days earlier would be entitled to full reimbursement from
the government to retrofit it. Of course, rather than
ever pay for such an upgrade, the government merely
shifts the cost of developing the solution for
post-January 1995 installation to the carrier so that
none of the cost of developing the solution for the
grandfathered switch is ever borne by the government.

The above example poses significant anti-competitive
concerns as well. A new entrant into the market on
January 2, 1995, would have to pay for the CALEA solution
for the same switch type its competitor had used in the
same market before January 1, 1995. The new entrant
essentially funds the entire cost of development of the
CALEA solution, the government takes advantage of
avoiding the development costs for the grandfathered
equipment, and the incumbent carrier avoids any cost,
thereby obtaining a significant competitive advantage.

Thus, as these examples illustrate and as set out
more fully below, the FBI's definition of "installed or
deployed" is arbitrary, capricious, an abuse of
discretion, not in accordance with law, and in excess of
statutory authority.

In addition to the reimbursement and competition
concerns, there is a significant enforcement issue as
well. If equipment, services or facilities "installed or
deployed" after January 1, 1995, are not CALEA-compliant
by October 25, 1998, a carrier may be subject to an
enforcement action under Section 108 of CALEA and civil
fines up to $10,000 per day per violation. See 47 U.S.C.
§ 1007; 18 U.S.C. § 2522(c).

Venue is proper under 28 U.S.C § 1391(e) because
the defendants reside in the District of Columbia.

III. PARTIES

The Cellular Telecommunications Industry Association
("CTIA"), a nonprofit corporation organized under the
laws of the District of Columbia, is an international
organization representing the wireless communications
industry. One of its primary purposes is to promote the
common interests of its members. Membership in the
association encompasses all providers of the commercial
mobile radio services -- including 48 of the 50 largest
cellular providers and personal communications services
providers -- and others with an interest in the wireless
communications industry, such as the manufacturers of
equipment used to provide commercial mobile radio
services.

The Personal Communications Industry Association
("PCIA"), a nonprofit corporation organized under the
laws of Virginia, is an international trade association
also representing the wireless communications industry.
Established in 1949, the association represents providers
of personal communications services, paging, mobile data
services, communications site managers, equipment
manufacturers and others providing products and services
to the wireless industry. One of its primary purposes is
to promote the common interests of its members.

CTIA has its principal place of business in
Washington, D.C. PCIA has its principal place of business
in Virginia. On behalf of their members, CTIA and PCIA
(collectively, "Plaintiffs") have participated in all
aspects of CALEA implementation.

Plaintiffs' members include "telecommunications
carriers" as defined under CALEA to mean a person or
entity engaged in the transmission of switching of wire
or electronic communications as a common carrier for
hire. 47 U.S.C. § 1001(8)(A). As such, Plaintiffs'
members are directly subject to CALEA obligations,
including the obligation to ensure that equipment,
services and facilities installed or deployed after
January 1, 1995, meet the assistance capability
requirements of Section 103 by October 26, 1998. To that
end, Plaintiffs members currently are expending
significant resources in an effort to meet their
compliance obligations. As telecommunications carriers
and manufacturers with CALEA obligations, Plaintiffs'
members would have standing to bring this suit in their
own right.

Each of Plaintiffs' members are affected and directly
injured by the FBI's arbitrary and capricious definition
of "installed or deployed." As set forth more fully below
in paragraphs 25-28, Plaintiffs' members will have entire
classes of hardware rendered obsolete and will bear the
significant cost of retrofitting such equipment to meet
CALEA standards if the FBI's attenuated definition is
allowed to stand. Plaintiffs' members who are eligible
and seek reimbursement under the FBI's cost recovery
rules each will dispute the FBI's definition of
"installed or deployed" and be forced to litigate the
definition in individual lawsuits. Those that do not
accept the FBI's definition by agreeing to retrofit their
equipment proceed at their peril because the FBI has
threatened that Plaintiffs' members will be subject to
enforcement actions for noncompliance after October 25,
1998, and could incur penalties of $10,000 per day per
violation until "compliance" is achieved. Accordingly,
Plaintiffs' members are immediately and directly affected
by the FBI's arbitrary rule. Plaintiffs exist just for
these sorts of actions where the individual participation
of association members is not required to assert claims
or grant relief.

Defendant Janet Reno is the Attorney General of the
United States and is being sued in her official capacity.

The United States Congress directed defendant
Department of Justice to implement the provisions of
CALEA.

Defendant Louis J. Freeh is the Director of the FBI
and is being sued in his official capacity.

Defendant FBI, an agency of the United States, is
located in the Department of Justice. Responsibility for
the implementation of CALEA was formally delegated from
the Attorney General of the United States to the Director
of the FBI or his designee.

IV. FACTUAL BACKGROUND

CALEA, Public Law 103-414, 108 Stat. 4279 (1994), was
signed into law on October 25, 1994. The purpose of the
law was to preserve the government's ability to conduct
lawfully authorized electronic surveillance in the face
of technologically advanced communications services while
protecting the privacy of communications not authorized
to be intercepted and without impeding the introduction
of new services or technologies.

In passing CALEA, Congress recognized that some
existing equipment, services or features would have to be
retrofitted to meet law enforcement needs. CALEA
therefore provided that the government would have to pay
carriers for just and reasonable costs incurred in
modifying existing equipment, services or features to
comply with CALEA's capability requirements. If the
Attorney General does not pay to retrofit the equipment,
services or features, Congress explicitly stated that
such equipment, services or features will be considered
to be in compliance.

21. Section 109 of CALEA authorizes the Attorney
General, subject to the availability of appropriations,
to agree to pay telecommunications carriers for all
reasonable costs directly associated with modifications
performed by carriers in connection with equipment,
facilities, and services "installed or deployed" on or
before January 1, 1995, to establish the capabilities
necessary to comply with section 103 of CALEA. Section
109(e) of CALEA directs the Attorney General, after
notice and comment, to establish regulations necessary to
effectuate timely and cost-efficient payment to
telecommunications carriers for, among other things,
costs necessary to retrofit existing equipment, services
or facilities. On February 16, 1995, Attorney General
Reno delegated her responsibilities under CALEA to the
Director of the FBI or his designees. 60 Fed. Reg. 11906
(1995) (codified as 28 C.F.R. § 0.85(o)).

The FBI initiated a rulemaking proceeding to
implement the cost reimbursement provisions of CALEA. See
61 Fed. Reg. 21936 (May 10, 1996). After notice and
comment, the FBI promulgated a final rule on March 20,
1997, with an effective date of April 21, 1997. See 62
Fed. Reg. 13307 (March 20, 1997) [the "Final
Rule"].

The Final Rule defined the term "installed or
deployed" as follows:

Installed or deployed means that, on a specific
switching system, equipment, facilities, or services
are operable and available for use by the carrier's
customers.

28 C.F.R. § 100.10.

Several examples illustrate the flaw in the FBI
definition of "installed or deployed." If a carrier
installed a particular switching platform in its network
on January 1, 1995, there is no dispute that this
particular switch qualifies for reimbursement under the
FBI definition. But if the same carrier had two of the
identical switch types but did not get the second one
installed until January 2, 1995, according to the FBI,
the second switch does not qualify for reimbursement. The
same would be true, according to the FBI, if the same
carrier had the second switch in storage prior to January
1, 1995, awaiting some future installation in the
network. According to the FBI, CALEA rendered the second
switch obsolete. Further, if that carrier had the second
switch under contract for purchase from the same vendor
that provided the first switch, the carrier must cancel
the contract or re-negotiate it to provide a switch with
CALEA-capabilities at the carrier's own cost.

Further, under the FBI's definition, a new market
entrant providing service after January 1, 1995, would
bear the entire cost of CALEA compliance for the
identical switch type used by an incumbent carrier in the
same market area prior to January 1, 1995. Thus, the FBI
under its definition could force the new entrant to
develop the CALEA solution for a switch type that would
otherwise be grandfathered in the network of the
incumbent. The incumbent would get the benefit of the
upgrade package, the government would avoid any expense,
and the new entrant would be forced to bear the entire
development cost.

In a more concrete example, in meetings with the
telecommunications industry, the FBI has stated that
carriers using GSM technology are not entitled to any
reimbursement and that GSM networks must be made
compliant at the carrier's own cost. GSM, or Global
System for Mobile telecommunications, was developed in
Europe beginning in the early 1980's with commercial
service first available by mid-1991. By 1993 there were
36 GSM networks in 22 countries. By the beginning of
1994, there were 1.3 million subscribers worldwide and
now there are more than 70 million subscribers in 109
countries. The U.S. market was opened to GSM when, in
1994, the Federal Communications Commission, auctioned
large blocks of spectrum in the 1900MHz band. Thus, GSM
was deployed around the world well before January 1995
and, in fact, was installed by at least one carrier in
the United States prior to January 1995.

This issue is not hypothetical or merely of academic
interest. If equipment, services or facilities installed
or deployed after January 1, 1995, are not
CALEA-compliant by October 25, 1998, a carrier may be
subject to an enforcement action under Section 108 of
CALEA and civil fines up to $10,000 per day per
violation. See 47 U.S.C. § 1007; 18 U.S.C. §
2522(c).

Accordingly, the FBI's definition of "installed or
deployed" puts carriers in immediate peril. The FBI has
attempted to shift the cost of compliance to carriers for
equipment, services and facilities otherwise
grandfathered under CALEA. Therefore, Plaintiffs and
their respective members have suffered and continue to
suffer injury.

V. CLAIMS

COUNT I(Declaration that the FBI definition of "installed or
deployed" in its Final Rule violates CALEA)

Plaintiffs incorporate by reference paragraphs 1
through 28.

CALEA requires reimbursement of costs incurred by
telecommunications carriers to modify equipment,
facilities, and services "installed or deployed" on or
before January 1, 1995, to meet the capability
requirements of Section 103.

The Final Rule adopts an overly restrictive
definition so that identical equipment or services that
are CALEA-compliant for one carrier are not
CALEA-compliant for another. Under the FBI's distorted
definition, millions of dollars of equipment have been
rendered obsolete and the costs of retrofitting such
equipment have been shifted to carriers.

Plaintiffs are entitled to a declaration that the
Final Rule's definition of "installed or deployed" is
arbitrary, capricious, an abuse of discretion, and not in
accordance with law.

COUNT II(Injunctive relief)

Plaintiffs incorporate by reference paragraphs 1
through 32.

For the reasons set forth above, the definition of
"installed or deployed" contained in the Final Rule, 28.
C.F.R. § 100.10, is arbitrary, capricious, an abuse
of discretion, and not in accordance with law.

Accordingly, Plaintiffs are entitled to an order
enjoining the FBI from enforcing the Final Rule under
Section 108 of CALEA or 18 U.S.C. § 2522.

VI. PRAYER FOR RELIEF

WHEREFORE, Plaintiffs respectfully request entry of
an order --

declaring that the Final Rule's definition of
"installed or deployed" is arbitrary, capricious, an
abuse of discretion, and not in accordance with law;

enjoining the FBI from enforcing the Final Rule or
otherwise acting contrary to law; and

vacating and remanding the Rule for further
rulemaking consistent with the Court's decision.